How does one write-off the initial "Franchise Fees"?
The IRS has classified Franchise Fees along with trademarks, trade name, goodwill, going concern value and covenants not to compete as Intangible assets.
The IRS has specified clearly in Code Section 197 the treatment of Intangible assets that have been acquired or placed in service after August 10, 1993 and that were used in Trade or Business for the production of income.
The IRS has stated that these assets have to be amortized over 15 years. We use the term amortization instead of depreciation for write off of intangible assets, and the term depreciation is used to identify write-off of tangible assets.